Thursday, October 31, 2013

Cliff Notes Version of Obamacare

My Cliff Notes Summation of Obamacare

First of all, this country is in dire need of healthcare reform. The political party in power would favor a universal single payer system, however there is a huge question of whether this is fiscally possible considering the budget deficit and future cost projections of Medicare. Therefore, in this poster's opinion, the only way to even consider single payer would be a combination of Medicare funding reductions and taxation, both red flag political issues that neither party wants to undertake.

Therefore, Obamacare was structured through the private sector with the objective of insuring millions of Americans and providing affordable coverage for same. In order to accomplish this, premium subsides and a formula for calculating same was devised in order to create affordability based on income. In order for this formula to work, it would be necessary for those who do not qualify for premium subsidies to pay more for coverage to offset the subsidized premiums.

One of the primary features of Obamacare is coverage for everyone regardless of pre-existing medical conditions. In order for this concept to work in a private sector program, the number of medically challenged enrollees has to be offset with a like or higher number of healthy people. Insurance companies are private entities that must make a profit to stay in business. Their actuarial accounting component has to make the calculation as to what has to happen to create a positive bottom line.

The result of this part of the equation is that premiums have to be set to take into consideration the overall cost of providing healthcare without the ability to weed out the most costly medically challenged members. Thus, in simple terminology the healthy and wealthy have to pay for the sick and lower income members.

The current version of Obamacare, in this poster's opinion, was rushed to market far sooner than necessary. The result was a series of coverage mandates that made a significant number of current plans obsolete and is causing many of the current insured to lose coverage by the end of the year. The new coverage they are facing without premium subsidies is higher priced with less benefits. Coverage mandates, which, again in this poster's opinion, are a part of the actuarial calculation, are driving the cost up in order to create more of a balance between the cost of insuring the healthy versus the cost of insuring the sick. Please note that if the insurers cannot make a profit, they do not have to participate; they can basically take their ball and go home.

All of the above does not even mention the total failure of the federal Obamacare website and various other issues relative to same. To cut to the chase, as a health insurance broker, I am seeing clients who are achieving better premiums and better coverage but a larger number of clients who are hard working middle class people who face significantly higher premiums and reduced benefits.

This program was rushed into reality and, in my opinion, is too highly flawed to succeed. The best approach today would be to put everything on hold, develop a panel of politicians, physicians, insurance company executives, and some of the top business leader in this country to take the time to fix Obamacare. This country is in desperate need of healthcare reform, however this current version is not the answer.